'NO-PAPER' TRANSACTIONS WORRY SOME

Within a year the U.S. Treasury will stop issuing certificates for its notes and bonds and a simple receipt will serve as proof of investors' government holdings.

Despite the apprehensions of some investors who prefer to physically hold certificates, the Treasury and others in the securities industry are moving further into electronic book-entry, an accounting method in which transactions are recorded in a computer system and no document other than a receipt is issued to the buyer.

The Treasury started book-entry and elimination of certificates with its bills in 1976 and three years later had completed transition to the system.

About 5 percent of Treasury bonds and notes are currently recorded electronically without issuance of a certificate.

Many brokerages have also been using a similar system, often selling items such as certificates of deposits and some municipal bonds to their clients, recording them in computer memories, and letting the periodic statement speak for the holding.

But as the wave of the electronics future washes over the securities industry, many investors still balk at the thought of having only a receipt to prove their holding, according to some industry spokesmen. Many agree, however, that despite those exceptions -- and with the passage of time -- investors will come to accept it.

"Think of it this way," said Gary J. Damen, divisional manager of Shearson Lehman Bros. in Deerfield Beach. "If you were buying savings bonds, and they kept taking money out of your payroll check, telling you you had savings bonds, but you never saw the savings bonds -- how would you feel?"

But Brian Benson, Treasury public information officer for the last year and a half, hasn't run across any objections to the book-entry of Treasury bills.

"In the time I've been here, I'm not aware of its being an issue," he said. "When you're talking about the volume, the size of transactions involved here, you've got pretty good sophistication in investors."

Treasury bills, which mature in 13, 26 or 52 weeks, are issued in denominations of at least $10,000, while notes and bonds are issued for at least $1,000 with notes carrying a maturity of one to 10 years and bonds maturing after 10 years.

"You're talking about a level of sophistication that they know enough about investment to know it's safe," Benson said, adding that mandatory Treasury book-entry is expected to be completed by mid-1986.

Brokers who have observed client reactions to book-entry as used in brokerages say that some people do take exception to the system.

"I think older people tend to want that security of actually having a certificate," said Shearson's Damen.

Richard DuPuis, associate vice president of Dean Witter Reynolds in Boca Raton, agreed with Damen that particularly those who have lived through the Depression feel safer with a certificate in possession.

Damen also said some investors are especially conscious about holding proof of investments in the wake of collapses of establishments such as ESM Government Securities Inc. of Fort Lauderdale and the brokerage firm Bevill, Bresler, & Schulman Inc., which had offices in Palm Beach and Fort Lauderdale.

Many want a certificate in hand just in case something happens, according to DuPuis. Even if their investments are protected by an agency such as the Securities Investor Protection Corp. -- which covers investments if a registered brokerage fails -- they want possession to avoid inconvenience.

The big-name brokerages, however, are not usually the object of that perception, DuPuis said.

While investors will not actually have a certificate to prove their Treasury holdings, they still will have evidence in the form of a receipt and their canceled checks, said Treasury Information Officer Benson.

He explained that buying book-entry securities from a bank involves filling out a short informational form and submitting a cashier's check. The investor is then given a receipt.

"There's obviously a record kept of the transaction," Benson said. "You have the purchase order and the record of the check. They take a photograph of the record. The information goes on the computer for processing."

And just like at the Internal Revenue Service, which, as Benson pointed out, had its computer problems this tax season, the Treasury keeps an original hard copy of the transaction.

The advantage of book-entry to the Treasury is increased efficiency, according to Benson.

"We're moving into an electronic era," he said. "We have an enormous volume. Having the total marketable debt electronic will significantly simplify administrative problems. And, I might add, it facilitates trading."

Book-entry "is going to be the future," said David A. Waxman, financial planner and vice president of Prudential Bache Securities in Plantation. Even today it is not uncommon for brokerages to assess an additional fee for those who request possession of an actual document in the case of certificates of deposits, according to Waxman.

"It's becoming more and more accepted," he said. Those who approach the book-entry method with caution many times just don't know how it works and are relieved when the system is explained to them, Waxman added.

"It's just a matter of getting used to it," he said. "That's why they're doing it little by little.

"The use of computers, while there may be some mistakes made, has enhanced the service for clients and has improved service tremendously."